AutoZone Case Solution & Answer

Company’s Financial Statement:

The Company’s market value of the share which is $348 per share. The Company has been enjoying its rapid increase of Thousands of Dollars from the operations of the company as the net income of the Company, which was $0.738 million in the year of 2010 and now is looking at$0.849 million in the year of 2011. The revenue of the Company which was $0.738 million in the year of 2010, and now is looking the $0.849 million in the year of 2011; this shows that the company is performing very effectively in their operations.

The company has a continuously steady growth in their assets but not rapidly, This steadyincrease in the percentage of 5.35% per annually, which iscalculated from the values of the total assets of the company of $5,869,602 in the year of 2011, and $5,571,594 in the year of 2010, that means that company has increased in size,this is quite decent to take the decision from the company in the way of better future going concern.

This information of the company will lead the information that the Company has no need to bear the payment of the dividend in high value. The company has to minimize the cost of the Dividend which will lead a valuable additional profit saving amount in their retained earnings, from this other value of the retained earnings will provide the amount of the assets extension reserve which will lead the increase in the size of the company and from these increases, the company will generate more revenues and net income.

From the above paragraph; the company has a point, how to tackle the situation of excess issued shares in the market. This issue has two alternative methods to grab the company’s shares back to the Company.

What is repurchases of the Shares:

The repurchases of Shares is the process in which the company purchases its shares from the market where the business is operating efficiently. It will generate some critical matter of the financial activity of the Company, this is mostly done with the reason that the Company wants to take the grip on the Company’s equity section and thecompanydoes not want to pay more dividend on the issued share.

The Repurchases of Share Effects:

Firstly, The Company can repurchase its stocksfrom the market. Mr. Johnson, who is working in the assets management company,has also thoughtthat company should repurchase of its sharefrom the market. This method can be used bythe company to grab the share in one shot. The company will have to face some average level of problem that the Company market value of the stock will go down rapidly, which is also a benefit for the company as the company will purchase the share in low market price. If acompanyis about to take back its shareof the market, the matter has to take in the consideration is that the corporation will lose itssignificant value of the retained earnings. The company should have to consider its retained earnings that the Company has the enough amount from which the company can make the payments of the repurchase of the share and after that company continuously operates and functions without aforecast of any problems, this will provide a downfall in the cash flow rapidly………………

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